Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Cluff Gold says company is not for sale at present, to focus on exploration drilling

Africa focused gold deposit developer Cluff Gold (LON:CLF, TSX:CFG) said that whilst it has granted permission to conduct due diligence to a few would-be buyers in the recent months, the company is not for sale unless it gets an offer at a “significant premium” to its recent three month trading average.

In its full-year results statement, it said it is the view of the board and senior management that otherwise, this is not the appropriate moment for the company to be sold.

At the end of April, it had told the market that discussions with regards to a possible offer for the company were ongoing. Back in February, Cluff initially confirmed that it had received an approach from an unnamed third party.

Today the group said it is consistently adding value to the ompany through its programme of optimising operations and further exploration drilling and it believes that the company's value will be further re-rated when its exploration in 2010 adds more ounces at all three of its projects.  "We are determined to avoid any temptation to acquire additional interests in other countries until our cash flow can be relied upon to support such a move as well as funding our exploration plans," chairman and chief executice JG Cluff said.

During 2009, the company’s annualized production was close to the company’s 100,000 ounce target following the commissioning of the Kalsaka mine in Cote d’Ivoire and the Angovia mine in Burkina Faso. Cluff Gold expects to meet the target in 2010, also expecting the ongoing exploration programme at Angovia to extend its oxide life.
An initial drilling programme of 10,000m of reverse circulation drilling is planned to begin in Q2 2010 with an aim to increase resources, while a drilling programme is currently being undertaken at Angovia to increase overall resources and reserves.

The commissioning of the mines resulted in revenues of US$39.6 million in the year to end-Dcember 2009, compared to no revenues the previous year, while pre-tax losses rose from US$248,000 to US$35.5 million, resulting in losses per share of 30.25 US cents compared to last year’s loss of 1.08 US cents. The increase in losses was due to a US$21 million impairment charge against the Angovia mine. Pre-impairment losses stood at US$12.5 million, partially due to a one-off credit of US$9 million in respect of the acquisition of the remaining 40% of the Baomahun gold project in Sierra Leone in 2008.

The assets of the group at 31 December 2009 totalled US$113.9 million, compared to US$128.5 million at 31 December 2008. The decline was due to the Angovia impairment charge.

Meanwhile, the resources at the Baomahun project have increased to 1.1 Moz (million ounces) in the measured category and 1 Moz in the inferred category. Cluff Gold has already received a draft preliminary assessment, which is currently being finalised while the company is progressing the full feasibility study. The scoping study for Baomahun is expected in June 2010.

“We believe that the potential at Baomahun is considerably greater than our current understanding, and whilst we wish to conclude the development of a mine based on the current resource area, we are also focusing on extending our knowledge across the remainder of the 12km prospective belt in 2010,” said the chairman and CEO.

Cluff Gold offered a positive outlook for the current year, noting the rising gold prices that have recently set new record highs at nearly US$1,250/oz and currently remain close to US$1,200/oz, as well as the fact that the company’s operations are located in West Africa, which it called a “perhaps the most compelling mining destination in the world” with “sensible mining investment codes”, while remaining about the super tax on mining companies recently introduced by the government of Australia.

The company simultaneously reported additional assay results from Baomahun, which it said were encouraging with intersections grading up to 10.5 g/t (grammes per tonne) gold over 10 metres.

Other results included intercepts of 31 metres at 3.88 g/t gold, 9 metres at 4.38 g/t gold including 4 metres at 8.22 g/t gold, 2 metres at 5.99 g/t gold, 18 metres at 4.2 g/t gold including 3 metres at 11 g/t gold, 3 metres at 5.20 g/t gold, 38 metres at 5.43 g/t gold including 10 metres at 10.5 g/t gold and 2 metres at 12.1 g/t gold, 8 metres at 2 g/t gold, 12 metres at 1.78 g/t gold and 3 metres at 6.43 g/t gold.

In October, Cluff reported a 40% increase in the projects total mineral reserves. As a result, the inferred minerals resources increased to 9.2 million tones grading 3.2 g/t (grammes per tonne) or 957,000 oz (ounces) from 500,000 oz of gold, while the total measured and indicated resource now stands at 12 million tones grading 2.9 g/t for a total 1,103,000 ounces of gold.

A resource update is currently underway and is on schedule to be completed in Q2 2010.